Chemical market trends: Most contract outcomes are as expected

02 April 2012 00:00[Source: ICB]

News of an initial European ethylene contract for April was reported last Wednesday, raising it by €40/tonne because of firmer upstream costs. The new €1,345/tonne FD Northwest Europe (NWE) contract was deemed in line with expectations, despite some customers targeting a rollover.

Europe's April butadiene (BD) contract has been agreed at €2,275/tonne - marking a €90/tonne hike from the month before. The gap between spot and contract prices had left players expecting a contract increase. Producers said they also wanted to support an improvement in cracker margins, although buyers' concerns about downstream demand weighed on their targets. In the US, meanwhile, the fourth and final BD nomination saw a 4.8% increase at $1.52/lb ($3,351/tonne) FOB US Gulf. This is 7 cents/lb higher than the producer's March settlement. The April nominations from the three other producers were at $1.55/lb, $1.60/lb and $1.65/lb.

Japanese producer JX Nippon Oil & Energy Corp. has nominated a rollover for the Asia Contract Price (ACP) for benzene at $1,210/tonne on a CFR Asia basis. The company had wanted a higher settlement because of the squeeze on margins, it said.

The US paraxylene (PX) contract for March has settled at 82 cents/lb, up 3 cents/lb from February's 79 cents/lb. The latest hike came soon after the ACP was announced up $60/tonne at $1,650/tonne CFR Asia.

US methanol contracts have remained the same for April. Southern Chemical posted 133 cents/gal while Canada's Methanex posted 134 cents/gal. Players were expecting a rollover.